Interactions between Social Security reform and the Supplemental Security Income program for the aged

Abstract

Most analyses of Social Security reforms ignore interactions with the Supplemental Security Income (SSI) program. We explicitly consider such interactions using a microsimulation model. The basic reform we examine reduces Social Security benefits by the percentage required to approach 75-year solvency. We then add options for attenuating the effects on low-income beneficiaries, including a minimum Social Security benefit and liberalization of three SSI program parameters. Focusing on the elderly in 2022, we compare the simulated reforms with respect to benefit receipt patterns, poverty rates, and winners and losers. Social Security beneficiaries turn to the SSI program for income support in response to Social Security benefit reductions, but substantial SSI reforms are necessary if the SSI program is to play a more effective income security role. Among the limited set of reform options we consider, Social Security minimum benefit plans would be more effective in reducing poverty among low-income beneficiaries.